The Brazilian Mess – how to explain it

Trying to explain what is going on in Brazil to my friends and colleagues here in Australia, has been a challenge and a bit of a long conversation. I am very far from an economic connoisseur, miles away from understanding politics, but I’m good at summarising situations, so here is how I see it…

Let’s start with the military coup of 1964 which lasted until the 80’s leaving Brazil with an eroded educational system (teachers and students were subversives) and an external public debt that would become evident only years later, but was about four times higher than it is now, and it was about half of Brazilian’s GDP.

Since then, Brazilian Politicians are trying to cope and recover from this hole.

Add a lot of corruption in all parties and throughout time with no consequence. With the free press, after the end of the dictatorship, a lot came to light but very few people felt the whip of punishment.

Then you have Collor, the president who resigned in 1992 not to be impeached, and was re-elected to the Senate in 2014. He is now part of the investigation for corruption, “Lava Jato” operation, that I will mention a bit more about. He was almost impeached because his main economical act was invading people’s savings accounts leaving everyone with the equivalent of AU$50 in the bank and taking whatever was extra to fix the economy. My grandfather, on my mother’s side, is counted as one of his victims, like him many didn’t recover of the emotional blow that measure landed them and died of health complications short after. Needless to say, he didn’t fix anything.

After some years Lula arrives at the presidency, in 2003, a worker with no education who had been fighting the noble fight for the poor for three elections unsuccessfully. He was to stay until 2011 in two four-year mandates. During his time he put a series of measures in place that were apparently fantastic but completely unsustainable. He “gave money away” to the people. He created supporting systems, I think they are similar to the Dole, that were given to various people who, no doubt about it, needed it:

Support for students

Support for unemployed people

Support for families with many children

Support for families of incarcerated people

Support for poor people to equip their housing commissioning houses

Support of students to study overseas

All these sound great, and to the receivers, it was great. The problem is that these same receivers were not generating value in the society to to refill the public coffers.

For a while these measures turned the economy and there was a sense of false prosperity. Salaries were raised in general, because people would prefer not to work and receive the Gov Support if the salary didn’t match at least what they would get if they didn’t work.

Brazilians are great in breaking payments in 10 instalments and overcommitting their income. There is a cultural element where my people tend to think they have to appear richer than they are, which makes for a lot of over-spending.

I believe that meanwhile, Lula, who was supposed to be for the people, became corrupt, he probably became tempted by the power, the money and the abundance he had never experienced before. His children became multi-millionaires in the span of ten years and their elevation is parallel with lobbying and political movements and benefits given to large corporations.

Dilma, the current president, is Lula’s protege, she managed her first mandate in the same spirit, in the wake of Lula’s policies. She was re-elected in 2014 but hasn’t been able to do much so far, because of all the corruption issues. I don’t see her as being as corrupt as Lula, I think she isn’t as smart, she seems to have a faint noble streak, but she is naive and frankly, I don’t find her smart at all.

In August 2013, the law that allows for reduction of sentences to convicted criminals for dubbing their fellow lawbreakers, was reviewed and signed by Dilma. That was something very important for what would come next, if she knew what she was doing!

Then came Operation Car Wash “Operação Lava Jato”, in March 2014, the investigation that caused all the mess started. Looking into the money laundering of one car wash, the first domino fell.With the law I just mentioned above, one person caught started telling on the others. About 160 people have been put in jail so far, almost 3 Billion Reais have been recovered while about 22 Billion have been requested to be returned. Collor and Lula have been caught in this operation’s net and are being investigated.

Dilma, in an attempt to help Lula, offered him the Chief of Staff Ministry, to allow him to avoid preventive incarceration, and to allow him to be investigated by a higher level of justice, escaping the grasp of the Car Wash Operation; I believe that he would be able to manipulate the higher level judges and escape justice.

Lula hasn’t been allowed to get into this ministry so far, the justice system is fighting hard to avoid it. There is talk he is trying to run off to Spain.

This ministry and the release of some private conversations recorded between Lula and Dilma were the straw that broke the camel’s back, as I see it. They turned the public opinion, created the protests and made the impeachment process to progress.

This week, one instance of the impeachment process was voted and approved. In the next few weeks, the Senate should vote, if they approve it, Dilma will be removed from office temporarily, for 180 days, as the investigation moves forward.

With all that we also have the crazy mozzies, mysterious viruses, the new flu felling people by the bunch, the ecological disaster, the super polluted Guanabara Bay, falling bike paths, the infra-structure in Rio with its delayed projects AND we are 105 days from the Olympics…

PS.

I have to say that I’m still happy, because for the first time a lot of people are feeling the consequences of being corrupt, are being punished. I feel there is a sense of pride in being honest being recovered and although the short term from now should be dire, the long term has to be better than it has been.

PS2.

To help my writing, please buy and review my new book at Amazon. Find the book in the market you are registered at, search: Tania Crivellenti –“Sideways Reality” [at Amazon AU, US, BR]